The life-changing role of employers in narrowing the gender pensions gap
Although great strides have been made in the past century to bridge the gap between the sexes, we also still live in a world where statistics show us that it is going to take us almost three lifetimes (or over 200 years – according to The World Economic Forum’s 2017 Gender Gap report) to achieve a more utopian kind of equality for both men and women. And there is also one thing that is very clear in this shift –that employers will play a leading role in helping to shape this new mould. Particularly from a financial and ideological point of view.
One area that has been and continues to be significant, for women particularly, and has been a big issue for employers, is the pay gap between men and women – currently at around 18%. But lurking somewhat silently in the dark for the most part there is an even bigger chasm to fill – and that relates to the financial crisis that women are facing when heading into retirement. We now know that the female pension gap completely dwarfs the gender pay gap – and at almost 40%, this is double the figure of the gender pay gap. In real world terms, this means that more women are facing poorer lives in retirement than men. But why?
There are many reasons for this significant void. Part-time working patterns (and therefore lower pension contributions), salary differences driven by the gender pay gap, and the rise in women’s pension age to equalise with men alongside their traditionally longer life spans, as well as personal issues that can significantly affect finances such as divorce and separation, have all given rise to women experiencing a much more financially raw end to life than men overall.
Although this may seem on the surface like a personal problem that falls outside of the working agenda, the bigger picture shows that this is a serious wellbeing issue – just perhaps one that is much longer term. Mental health issues have taken centre stage for employers in recent years, and rightly so, but with huge gaps like this for women starting to really take their toll on half of our population, financial wellbeing also needs to find its foothold on our wellbeing and reward agendas if we are to ever truly be taking equality seriously.
So how do employers go about creating such life altering change for the sexes in a consistently fair but vital way?
One thing that is clear is that engagement is everything. At Personal Group, we ran workshops around the time of pension auto enrolment back in April for our staff, in a tough period where employee contributions have significantly increased. This exercise was intended to encourage all of our employees – not just women – to take up the opportunity to increase their pension pot and to educate them on the difference it would make to their lives.
This kind of approach may not work for every organisation. What is key however is to build a strong rapport with your people and provide a thorough education about financial wellbeing. Engage with individuals. Change their lives. And you will reap the rewards.
There is something to be said about recognising the differences of your staff – as well as the similarities. People, and women especially perhaps, need to be given the right tools to handle their finances and be encouraged to consider different, perhaps riskier, investment strategies. Employers should review their benefits systems through a gender lens and always ensure that options and communications meet the needs of both sexes to have the biggest impact. Outside of effective communications and engagement, there are also other options which, budget dependent, could really put your organisation in a trailblazing position amongst your peers, such as offering an enhanced pension pay style scheme for those on maternity leave so that a lower income does not ever come back to affect them at a later time in their life when people often need the most support.
Being a game changer is a mentality for an organisation. To keep ahead of the curve and never lose sight of the future ahead of us, we must acknowledge but also look beyond the everyday, beyond offers and meditation classes, if we are truly going to build a stronger, more resilient and meaningful workforce. We must play our part and be the facilitators who can build an unbreakable bridge to help all of our employees (both men and women alike) both financially and otherwise – longer term, not just for tomorrow. It’s time to start the future now.